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Tecom land dispute risks damaging US FTA

US developer's lawsuit against Dubai-owned firm brought to attention of US president.

By John Irish

Sat 19 Apr 2008 11:56 AM

A $1 billion lawsuit between Tecom Investments and a US company could hinder free trade talks between the US and the UAE, a US Congressional document shows.

The case, which revolves around 38 acres of land, was named in a letter from the US House of Representatives to US President George W. Bush on March 28 on how the US must enforce laws to break trade barriers.

The letter, obtained by newswire Reuters, urged the US trade representative to press for a satisfactory resolution of the case through its trade negotiations with the UAE, including the Trade and Investment Framework Agreement (TIFA) that usually leads toward a Free Trade Agreement (FTA).

"The USTR should emphasise that a resolution of this case and any others like it is necessary for any further progress toward an FTA," the letter said.

The US began free trade talks with the UAE three years ago, but progress stalled last March after the fast-track negotiation authority from the US Congress expired.

The dispute between Tecom, a state-owned technology investment company, and US property developer Capital Partners revolves around land Capital Partners attempted to buy from Tecom in July 2005.

Capital Partners claims the land belonged to another Dubai government entity. Capital Partners, which boasts former presidential candidate Tommy Thompson as one of its advisors, declined to comment on the case on Thursday.

"Out of respect for the arbitration process and our arbitrator, I cannot comment at this time," said Jonathan Wride, the company's managing director.

Capital Partners had initially agreed to develop a $1 billion mixed-use project on land almost opposite one of Dubai's manmade palm islands in a deal hailed as one of the first foreign investments in Dubai.

But in August, the US private equity firm filed a $1 billion claim against Tecom for misrepresentation and breach of contract, Wride said in an email statement to Reuters at the time.

Tecom, which is also negotiating joint venture deals with the world's second largest computer maker Dell, confirmed that the lawsuit was ongoing but gave no more details.

The lawsuit is being handled by the Dubai International Arbitration Centre.

"The lawsuit between Tecom Investments and Capital is still under litigation," Tecom said in a statement sent to Reuters.

"It is inappropriate for us to comment on its status or any related issue."

The US Embassy in the UAE capital Abu Dhabi declined to comment on the case, but a diplomatic source said the US administration wanted to eventually renew the fast-track.

"The administration would like to see it renewed at some time, in the meanwhile, we continue fruitful discussions with the UAE in the framework of TIFA," a diplomatic source said.

The UAE is keen to conclude the FTA. Bahrain and Oman are the only two Gulf countries that have concluded free trade deals with Washington. (Reuters)